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SMEs' Contribution to Employment


This Document is Archived


SMEs in New Zealand: Structure and Dynamics - 2006

[ Last Updated 2 June 2006 ]


The number of workers employed by SMEs increased.

SMEs accounted for 29.7% of total employment at February 2005. The number of people employed by SMEs increased between 2004 and 2005 from 479,200 to 512,840, up 7 percent.

Figure 3: Total Employment by Enterprise Size, as at February 2005

Image of "Figure 3: Total Employment by Enterprise Size, as at February 2005"

EC Size Group Employee Count (EC) %
0 0 0.00%
1-5 184,500 10.68%
6-9 128,940 7.46%
10-19 199,400 11.54%
20-49 241,220 13.96%
50-99 160,740 9.30%
100-499 310,800 17.99%
500+ 502,400 29.07%
Total 1,728,000  

A comparison of government and private employment demonstrates the significance of the government sector to total employment in larger enterprises.

Figure 4: Total Private and Government Sector Employment by Enterprise Size, as at February 2005

Image of "Figure 4: Total Private and Government Sector Employment by Enterprise Size, as at February 2005"

EC Size Group Number of Employees
Private Sector Government Sector
0 0 0
1-5 183,140 1,360
6-9 125,470 3,470
10-19 189,250 10,150
20-49 215,760 25,460
50-99 141,500 19,230
100-499 259,990 50,810
500+ 300,460 201,950
Table 3: Annual Percentage Change in Employment by Enterprise Size, as at February 2005
EC Size Group 2001 2002 2003 2004 2005
0 - - - - -
1-5 1.33% 3.45% 3.99% 1.90% 7.79%
6-9 2.38% 3.35% 8.34% 2.08% 5.69%
10-19 4.01% 3.27% 9.57% 2.58% 7.18%
20-49 1.85% 1.21% 7.64% 3.09% 3.05%
50-99 1.77% 2.74% 6.57% 4.50% 4.26%
100-499 3.72% -0.23% 2.11% 4.12% 5.17%
500+ 6.65% 3.56% 3.79% 4.19% 4.82%
Total 3.77% 2.38% 5.26% 3.46% 5.22%

Businesses with 1-5 employees created the greatest number of new jobs…

Table 4 illustrates the contribution of firms to job creation in the economy between February 2000 and 2005. The largest single contributing group was new businesses employing 1-5 employees, which created 93,860 new jobs. Of continuing businesses, the most new jobs came from firms with 500 or more employees, which created 77,250 new positions.

…but are also the greatest contributors to employment reduction.

Between February 2000 and 2005, firms with 1-5 employees were the greatest contributor to employment reduction (a reduction of 82,790 jobs) followed by firms with 500 or more employees (a reduction of 77,750 jobs).

Table 4: Employment Creation and Reduction by Enterprise Size, February 2000 to February 20053
  EC Size Group
0 1-5 6-9 10-19 20-49 50-99 100-499 500+ Total
Employ­ment Creation                  
Conti­nuing business (thousands of employees) 44.44 47.80 23.45 31.31 38.19 27.89 56.75 77.25 347.07
New business (thousands of employees) 0 93.86 54.78 72.59 65.42 33.87 50.42 46.74 417.68
Total (thousands of employees) 44.44 141.66 78.23 103.90 103.62 61.75 107.17 123.99 764.75
Employ­ment Reduc­tion                  
Ceased business (thousands of employees) - -22.59 -12.56 -17.55 -26.34 -14.52 -28.40 -27.44 -149.39
Conti­nuing business (thousands of employees) 0 -60.20 -35.02 -44.92 -47.19 -26.00 -43.78 -50.31 -307.42
Total (thousands of employees) 0 -82.79 -47.58 -62.47 -73.53 -40.53 -72.18 -77.75 -456.81
No Change                  
Conti­nuing business (thousands of employees) 0 0 0 0.07 -0.10 -0.08 0.40 0.30 0.59
Net Employ­ment Change 44.44 58.88 30.66 41.43 30.09 21.23 34.99 46.24 307.94

The average size of New Zealand firms increased slightly.

The average number of employees per enterprise as at February 2005 increased slightly to 5.2 up from 5.1 in 2004. When non-employing firms are removed, the average number of employees per enterprise in 2005 was 14.0.

Figure 5: Average EC per Enterprise, as at February 2005

Image of "Figure 5: Average EC per Enterprise, as at February 2005"

Year Average EC per enterprise
2000 5.16
2001 5.38
2002 5.36
2003 5.38
2004 5.06
2005 5.17

Figure 6: Average EC per Enterprise Less Non-Employing Enterprises, as at February 2005

Image of "Figure 6: Average EC per Enterprise Less Non-Employing Enterprises, as at February 2005"

Year Average EC per enterprise
2000 13.88
2001 14.16
2002 14.13
2003 14.14
2004 14.34
2005 14.03

Most New Zealanders in the labour force are paid employees.

Data from the 2006 Household Labour Force Survey shows that over 80 percent of people in the workforce are paid employees.

Figure 7: Employed Labour Force by Type of Employment, as at March 2006

Image of "Figure 7: Employed Labour Force by Type of Employment, as at March 2006"

Paid Employee 81.5%
Employer 6.3%
Self-Employed 11.4%
Unpaid Relative Assisting 0.7%

SMEs utilise the greatest proportion of part-time employees of all firm types.

Results from the Quarterly Employment Survey as at February 2005 show SMEs are generally more likely to have part-time employees than larger firms. Firms with 6-9 employees employed the greatest proportion of part-time staff (37.5 percent). However, as Figure 8 indicates, the majority of employees across all firms are employed full-time.

Figure 8: Full/Part-Time Employees by EC Size Group, as at February 2005

Image of "Figure 8: Full/Part-Time Employees by EC Size Group, as at February 2005"

EC Size Group Full Time Part Time
Total 69.76% 30.24%
1-5 65.61% 34.39%
6-9 62.47% 37.53%
10-19 69.76% 30.24%
20-49 72.09% 27.91%
50-99 66.57% 33.43%
100-499 73.46% 26.54%
500+ 70.86% 29.14%

3 Table 4 uses 2000 as the base year for the data. This means that, for example, if an enterprise contributed to the 1-5 EC category in 2000 but subsequently grew to 30 EC, that increase in EC would be attributed to the 1-5 EC category, not to the 20-49 EC category. Enterprises in the "No Change Continuing Business" row are enterprises that experienced only a very small percentage change in their contribution to employment (between -10% and 10%) from 2000 to 2005.


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